Business

Entergy’s profits surge by 50%-plus despite coronavirus crushing the local economy

Entergy Corp. on Wednesday posted a robust 53% increase in profit for the second quarter to $361 million, despite the effects of the coronavirus pandemic on the broader economy.

The New Orleans-based utility, which has nearly three million residential, commercial and industrial customers in Louisiana, Arkansas, Texas and Mississippi, has seen increased demand from its residential customers as people observe government stay-at-home orders during the pandemic.

But the utility also has seen a surge in arrears as many of its commercial customers struggle to survive the slump that has been caused by the virus.

Entergy Corp. on Monday said it expects revenue this year to be between $120 million and $140 million lower than it otherwise would have been …

Entergy, which has an unusually large proportion of industrial customers, accounting for about 44% versus less than one-third for a typical utility, said sales to industrial customers was down just 1% in the quarter, as business from new customers offset declines in existing customers.

The biggest hit from the coronavirus closures was the utility’s commercial customers, where sales in the quarter declined by nearly 11%. This was offset some by a 5% increase in weather-adjusted sales to residential customers.

Entergy on Wednesday reported annual profit above $1 billion for the first time since 2011, as the New Orleans-based gas and electricity compa…

“We have seen some slowdown in industrial activity (but) our industrial base is among the most economically advantaged in the world and we expect that they will lead the region’s recovery,” Leo Denault, Entergy’s chairman and chief executive officer, told analysts on a conference call to discuss the results.

Entergy also reports profit after making adjustments for volatile parts of its business, particularly the ups and downs of the wholesale business (primarily nuclear power) that it has been exiting for the past several years. The profits and loss of that business rise and fall with one-off costs and the swings in share prices and other investments used to manage its large contingency fund.

When adjusting for the $85 million profit in the wholesale business, the profit increase was a more modest 5% to $276 million.

Entergy Chief Financial Officer Drew Marsh acknowledged that the company had seen a surge in arrears because of the pandemic — to about $175 million versus a more typical level of $75 million in a given year.

This was primarily due to the effects on the economy of the measures to control the pandemic. The company has raised its provisions against bad debt only modestly to $30 million from $25 million.

Entergy’s utility companies have suspended all service disconnections since mid-March and the company says it has no plans currently to resume normal collections.

“We encourage our customers, however, to make payments on their account as they are able, so that their balance doesn’t accrue to an unmanageable level,” the company said in a statement.

Denault said that he still expects Entergy’s earnings on an adjusted basis will be between $5.45 and $5.75 a share this year, and reiterated the longer term forecast for earnings to rise by 35 cents a share annually thereafter through 2022.

This article was originally published on NOLA.com

Products You May Like

Articles You May Like

AmPac lands $500,000 to help Inland small businesses
We now know exactly what Jeff Bezos and Mark Zuckerberg think about before they acquire a startup
What’s the Difference Between Investing for Profit Versus Investing for Philanthropy? – ValueWalk
Feds investigating massive suspected Marin County Ponzi scheme involving dead real estate investor
Here Are the Top 10 Most Popular Stocks on Robinhood | The Motley Fool

Leave a Reply

Your email address will not be published. Required fields are marked *